Page 71 - City of Bedford FY20 Approved Budget

conditions and arbitrage regulation compliance determine the advantage of investment
diversification and liquidity. Generally, if investment rates exceed the cost of borrowing,
BEDFORD is best served by locking in investment maturities and reducing liquidity. If
the borrowing cost cannot be exceeded, then current market conditions will determine the
attractiveness of locking in maturities or investing shorter and anticipating future
increased yields.

Diversification - Market conditions and the arbitrage regulations influence the
attractiveness of staggering the maturity of fixed rate investments for Debt Service
Reserve Funds. At no time shall the final debt service payment date of the bond issue be
exceeded in an attempt to bolster yield.

Yield - Achieving a positive spread to the applicable borrowing cost is the desired
objective. Debt Service Reserve Fund portfolio management shall operate within the
limits of the Investment Policy’s risk constraints.

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